[Federal Register Volume 59, Number 205 (Tuesday, October 25, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26359]
[[Page Unknown]]
[Federal Register: October 25, 1994]
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DEPARTMENT OF EDUCATION
Arbitration Panel Decision Under the Randolph-Sheppard Act
AGENCY: Department of Education.
ACTION: Notice of Arbitration Panel Decision Under the Randolph-
Sheppard Act.
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SUMMARY: Notice is hereby given that on July 31, 1991, an arbitration
panel rendered a decision in the matter of Minnesota Department of Jobs
and Training, State Services for the Blind and Visually Handicapped v.
Department of Veterans Affairs (Docket No. R-S/87-8). This panel was
convened by the Secretary of Education pursuant to the Randolph-
Sheppard Act (the Act), 20 U.S.C. 107d-1(b), upon receipt of a
complaint filed by the Minnesota Department of Jobs and Training, State
Services for the Blind and Visually Handicapped on January 15, 1987.
The Randolph-Sheppard Act creates a priority for blind individuals to
operate vending facilities on Federal property. Under section 107d-
1(b), the State licensing agency (SLA) may file a complaint with the
Secretary if the SLA determines that an agency managing or controlling
Federal property fails to comply with the Act or regulations
implementing the Act. The Secretary then is required to convene an
arbitration panel to resolve the dispute.
FOR FURTHER INFORMATION CONTACT: A copy of the full text of the
arbitration panel decision may be obtained from George F. Arsnow, U.S.
Department of Education, 600 Independence Avenue, S.W., Room 3230,
Switzer Building, Washington, D.C. 20202-2738. Telephone: (202) 205-
9317. Individuals who use a telecommunications device for the deaf
(TDD) may call the TDD number at (202) 205-8298.
SUPPLEMENTARY INFORMATION: Pursuant to the Randolph-Sheppard Act, 20
U.S.C. 107d-2(c), the Secretary publishes a synopsis of arbitration
panel decisions affecting the administration of vending facilities on
Federal property.
Background
The Minnesota Department of Jobs and Training, the SLA, filed an
arbitration complaint under the Act stating that it had provided
vending machine services at the St. Cloud Veterans Administration
Hospital since 1977 pursuant to a contract with the Veterans Canteen
Service (VCS) under which the SLA paid commissions to VCS. The contract
expired in June 1986, and the SLA requested from VCS that it be given a
priority to operate the vending machines under the Act. Subsequently,
the SLA submitted to the Veterans Administration (now the Department of
Veterans Affairs (DVA)) a non-competitive bid that did not include the
payment of commissions to DVA by blind vendors.
DVA denied the permit application on the grounds that the Act does
not apply to DVA medical and domiciliary facilities served by the VCS,
and, therefore, all potential contractors, including the SLA, had to
comply with the DVA's competitive bidding procedures. On June 19, 1987,
the U.S. Department of Education (ED), Rehabilitation Services
Administration (RSA), convened an arbitration panel to hear this
dispute. In conjunction with the filing of the arbitration complaint
against DVA/VCS, the SLA obtained a Federal court injunction. On July
2, 1987, the court enjoined VCS from awarding a vending machine
contract to anyone other than the SLA pending the completion of the
arbitration panel's decision.
In an Opinion and Order dated September 2, 1988, the arbitration
panel convened by the Secretary (1) rejected DVA's claim that medical
facilities served by VCS were exempt from the priority provisions of
the Act, finding that the narrow exemption afforded VCS (and the
military exchanges) from the income-sharing requirements of the statute
did not incorporate a broader exemption from the priority provisions;
and (2) found that both the Act and the VCS statute serve important
public purposes and that the two statutes could be harmonized. The
panel issued additional findings, conclusions, and orders as follows:
the priority requirement of the Act is met when prior right or an
opportunity exists for a licensed blind person to operate a vending
facility. Normally this is accomplished through a permit application
and approval process. However, in particular instances negotiated
arrangements other than the standard permit application and approval
process might be used that are mutually acceptable to all parties.
While holding that VCS is not required to approve the SLA's permit
application for vending machine services at the Medical Center, the
arbitration panel maintained that VCS could not deny the SLA a priority
for a licensed blind person to provide these services.
The panel also held that the 17 percent commission rate on gross
sales payable by the blind vendor, considering his income, was
inequitable. Because of insufficient basis or guidelines in the record,
the panel withheld prescribing any specific commission rate and ordered
DVA to continue without interruption the existing arrangement under
which the blind vendor provided vending machine services at the Medical
Center. However, the panel ruled that commission payments were to be
suspended until the SLA and the DVA could reach a new agreement or, in
the absence of an agreement, until the panel issued a final award. The
panel retained jurisdiction during a mandated six-month negotiation
period.
On February 10, 1989, DVA requested the panel to reconsider its
decision, arguing that arbitration panels have no authority to issue
binding rules and orders against Federal agencies and that contracting
decisions made by the VCS Administrator are committed by law to that
Administrator's sole discretion and are judicially unreviewable.
On November 30, 1989, the panel issued an Interim Opinion and
Directive. In this opinion, the panel rejected DVA's challenge to its
authority to issue orders. The panel concluded that its powers under
the Act were not limited to mere declaratory findings. The panel
further ordered the parties to continue negotiations and to report back
within 45 days if there were any unresolved issues at that time. The
parties were specifically directed to present to the panel a joint
submission of issues, if any, that remained unresolved.
On January 24, 1990, the parties joined in a letter report to the
panel stating they had not reached a contract or agreement and that
other issues still remained unresolved.
On February 12, 1990, the SLA and DVA sent to the panel a joint
statement listing the unresolved issues. By letter dated June 19, 1990,
RSA authorized the panel to reconvene and decide the issues jointly
agreed upon by the parties, with any modifications deemed appropriate
by the panel.
Arbitration Panel Decision
After reviewing the evidence and arguments at the original hearings
in 1988, DVA's Petition for Reconsideration in 1989, and the evidence
and arguments submitted at the reconvened hearing in 1990, the panel
issued a final Decision and Order dated July 31, 1991. The panel
reaffirmed the findings contained in its original Opinion and Order
that the priority requirement of the Act is met when a prior right or
an opportunity exists for a licensed blind person to operate a vending
facility. In view of the longstanding and recognized practice of DVA in
contracting out vending machine services and receiving commissions
pursuant to authority granted to the VCS Administrator to enter into
agreements with outside suppliers for canteen services, the panel found
that these contract arrangements have carried out the mission of VCS in
an effective, high-quality, and self-sustaining manner. Accordingly,
the panel concluded that the SLA, in providing vending service under a
contract or agreement with VCS, should pay a commission to VCS. Upon
concluding that a 17 percent commission rate on gross sales generated
at the St. Cloud Medical Center was in fact fair and equitable, the
panel ordered the SLA to pay a commission to the VCS of 17 percent
effective as of the date of the issuance of the Decision and Order. The
panel found that the SLA need not pay commissions to the VCS from the
effective date of the panel's order dated September 2, 1988, suspending
payment of commissions, to the effective date of this current Decision
and Order. In addition, the panel (1) held that the SLA in providing
services under contract or agreement with VCS need not pay for costs of
storage and utilities; (2) concluded that, under the terms of the
contract to be negotiated and executed between the parties, VCS should
have no right to install and operate its own vending machines at the
Veterans Administration Medical Center in St. Cloud; (3) directed the
parties to proceed to implement by contractual arrangement the elements
tentatively agreed upon for providing vending services at the St. Cloud
Medical Center as indicated in the parties' joint progress report on
July 24, 1990; (4) ordered that the contract be entered into between
the SLA and VCS for a term of five years subject to renegotiation; (5)
ordered that disputes that may arise in negotiating the contract
between the SLA and VCS be resolved in accordance with the procedures
under the Randolph-Sheppard Act until there is further clarification or
delineation as to the proper forum for resolving the particular
dispute; and (6) ordered the parties to enter into an agreement for the
continued operation of vending machines by a blind person at the
Medical Center in St. Cloud consistent with the Decision and Order.
One panel member concurred in part and dissented in part,
concluding that (1) the VCS may not require the SLA or its assigned
blind vendor to pay a commission as a condition for the right to
operate vending machines at the VA Medical Center in St. Cloud; and (2)
the blind vendor's assignment to a facility under the Act being for an
indefinite period, the vendor's license to operate the facility may not
expire except for cause.
The decision of the arbitration panel was appealed to the United
States District Court for the District of Minnesota by the State of
Minnesota, Department of Jobs and Training, State Services for the
Blind and Visually Handicapped and, subsequently, to the United States
Court of Appeals for the Eighth Circuit by the Department of Veterans
Affairs and the Department of Education. On March 11, 1994, the U.S.
Court of Appeals for the Eighth Circuit upheld the District Court's
findings that the DVA/VCS is not exempt from the Randolph-Sheppard Act
and must comply with ED regulations on blind vendors' operation of
vending facilities. Specifically, the court found that the regulations
require the issuance of permits for an indefinite period of time and
prohibit the charging by VCS of commissions on sales from blind
vendors' operations without the approval of the Secretary of Education.
The court rejected the VCS contention that the Randolph-Sheppard Act's
permit system interferes with its mission to provide merchandise to
hospitalized veterans at reasonable prices and to remain self-
sustaining. Although the Veterans Canteen Act empowers the VCS to
operate canteens on DVA property, nothing in the Veterans Canteen Act
authorizes the VCS to exercise this statutory control over Randolph-
Sheppard vendors who also operate on DVA property. Because blind
vendors operate vending facilities under the Randolph-Sheppard Act and
ED regulations, the blind vendors' operation is neither a VCS canteen
nor subject to the Veterans Canteen Act and the VCS regulations.
The views and opinions expressed by the arbitration panel do not
necessarily represent the views and opinions of the U.S. Department of
Education.
Dated: October 19, 1994.
Judith E. Heumann,
Assistant Secretary for Special Education and Rehabilitative Services.
[FR Doc. 94-26359 Filed 10-24-94; 8:45 am]
BILLING CODE 4001-01-P
